Mutual Fund Calculator

The expense ratio is the annual fee charged by a mutual fund or ETF as a percentage of assets under management. A 1% expense ratio on $100,000 costs $1,000 per year. These fees compound and significantly reduce long-term returns.

Index funds and ETFs typically charge 0.03-0.20%. Actively managed funds charge 0.5-1.5% or more. The difference between a 0.1% and 1% expense ratio on a $100,000 investment over 30 years can exceed $200,000.

Over long periods, most actively managed funds underperform their benchmark index after fees. S&P 500 index funds with low expense ratios have outperformed about 80-90% of actively managed funds over 15-year periods.

A load is a sales commission charged when buying (front-end load) or selling (back-end load) a mutual fund. Front-end loads can be 3-5.75% of the investment. No-load funds have no sales commission — always prefer these.

ETFs typically have lower expense ratios, trade throughout the day, and are more tax-efficient due to their structure. Mutual funds are better for automatic investing with exact dollar amounts. For most long-term investors, low-cost ETFs or index mutual funds are best.

Dollar-cost averaging (DCA) means investing a fixed amount at regular intervals regardless of market conditions. When prices are low you buy more shares; when high, fewer. Over time this smooths out volatility and often outperforms lump-sum investing psychologically.